How to File a Complaint Against Harassment by Online Lending Platforms

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Letter to Attorney:

Dear Attorney,

I hope you are well. I am writing to seek your legal advice regarding an issue I have been facing with an online lending platform. After borrowing a small amount, I have been receiving relentless and aggressive messages and calls from the lending company's agents. They have also reached out to my contacts, including family and friends, to shame and pressure me into repayment. These actions are not only stressful but have also caused significant embarrassment and emotional distress.

I would like to understand the legal options available to me to stop this harassment and hold the company accountable for their actions. Could you kindly provide me with guidance on how to file a formal complaint and what remedies I may pursue under Philippine law?

I appreciate your assistance in this matter and look forward to your advice.

Sincerely,
A Troubled Borrower

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Legal Article: A Comprehensive Guide to Addressing Harassment by Online Lending Platforms in the Philippines

Harassment by online lending platforms has become an increasingly alarming issue in the Philippines. With the rise of digital lending applications offering quick and easy loans, many borrowers have found themselves subjected to abusive collection practices when they are unable to make timely repayments. These practices often include constant harassment, public shaming, threats, and even the misuse of personal data. As this problem escalates, it is crucial to know the rights of borrowers and the legal remedies available to protect them under Philippine law.

I. The Legal Framework: Governing Laws for Online Lending Platforms

Several laws and regulatory bodies in the Philippines govern the operations of online lending companies and protect consumers from abusive practices. Understanding these laws is key to knowing how to address and stop harassment effectively.

1. Republic Act No. 3765 (The Truth in Lending Act)

The Truth in Lending Act mandates transparency in lending transactions, ensuring that borrowers are fully informed of the terms and conditions of their loans, including interest rates, finance charges, and other costs. While this law primarily aims to protect consumers from hidden charges and deceptive practices, it also forms a foundation for holding lending companies accountable for unfair treatment, particularly when such companies resort to unethical methods to force repayment.

2. Republic Act No. 7394 (The Consumer Act of the Philippines)

The Consumer Act provides broader consumer protection against deceptive, unfair, and abusive practices in various industries, including lending. It grants borrowers the right to file complaints against lending companies that engage in unfair collection methods, such as harassment or threats. The law also ensures that consumers are treated fairly, and those who violate its provisions can face administrative sanctions.

3. Republic Act No. 10173 (The Data Privacy Act of 2012)

The Data Privacy Act is critical when dealing with harassment that involves the unauthorized use or dissemination of personal information. Many online lending platforms are notorious for accessing the borrower's phone contacts and sending messages to family members, friends, or colleagues to shame the borrower into repayment. This is a clear violation of the Data Privacy Act, which protects individuals' personal information and ensures that such data is processed with the borrower's explicit consent.

The National Privacy Commission (NPC), which oversees the implementation of the Data Privacy Act, has issued several warnings and penalties to online lending companies for misuse of personal data. Borrowers who believe their data privacy rights have been violated can file a formal complaint with the NPC.

4. The Revised Penal Code

The Revised Penal Code also provides grounds for filing criminal complaints against lending companies or their agents if they engage in threatening, coercive, or abusive behavior. Specific provisions of the Penal Code, such as those relating to grave threats (Article 282) and unjust vexation (Article 287), may be invoked when lenders use intimidation, threats, or cause unnecessary distress to the borrower.

5. SEC Memorandum Circular No. 18, Series of 2019

The Securities and Exchange Commission (SEC), which regulates lending companies, has introduced rules under its Memorandum Circular No. 18, Series of 2019, to explicitly prohibit unfair debt collection practices. The circular addresses various abusive behaviors, including:

• The use of violence or intimidation in the collection of debt.
• Public shaming or contacting third parties about the borrower’s obligation without their consent.
• Engaging in conduct that is unreasonable, excessive, or amounts to harassment.

The SEC has been proactive in issuing penalties and revoking licenses of lending companies that are found violating these guidelines. Filing a complaint with the SEC is one of the primary ways to hold online lending platforms accountable.

II. Common Forms of Harassment by Online Lending Companies

Before proceeding with a formal complaint, it’s essential to identify the specific forms of harassment that may have occurred. Some of the most common forms of harassment by online lenders include:

1. Excessive and Intrusive Communication

Many online lending companies resort to bombarding borrowers with multiple calls and messages per day, often at inappropriate hours. This type of communication, especially when it occurs late at night or in the early morning, can cause significant psychological stress and is considered a form of harassment under the law.

2. Public Shaming and Contacting Third Parties

One of the most egregious practices of some online lending platforms is contacting a borrower's family members, friends, or work colleagues without consent. In these messages, lenders often disclose the borrower’s financial situation and shame them into paying. In some cases, they even threaten to disclose the borrower's debts to their employer, which can lead to serious personal and professional repercussions.

3. Use of Threats and Intimidation

Some lending companies use threats of legal action, arrest, or public exposure to intimidate borrowers into repaying their loans. These threats are often baseless, especially when the amounts involved are small or when the lender has not actually initiated legal proceedings. Such actions are prohibited under the Revised Penal Code and SEC rules.

4. Unauthorized Access to Personal Information

Many lending platforms require access to a borrower's phone contacts and other personal information as a condition of the loan. However, if the company misuses this information by contacting third parties or publishing defamatory content, they can be held liable under the Data Privacy Act.

III. How to File a Complaint Against an Online Lending Platform

Borrowers facing harassment from an online lending platform have several options for filing a formal complaint:

1. Filing a Complaint with the Securities and Exchange Commission (SEC)

The SEC has jurisdiction over all lending companies, including those operating online. If the lending platform is using abusive collection practices, a borrower can file a complaint with the SEC's Enforcement and Investor Protection Department (EIPD). The complaint should include:

• A detailed account of the harassment.
• Evidence such as screenshots of text messages, call logs, or recordings.
• Any communication or documentation showing the misuse of personal information or threats made by the lender.

The SEC can investigate the matter, and if it finds that the lending platform has violated SEC regulations, it can impose penalties, suspend the company’s operations, or even revoke its license.

2. Filing a Complaint with the National Privacy Commission (NPC)

If the harassment involves the unauthorized use or dissemination of personal data, the borrower can file a complaint with the NPC under the Data Privacy Act. The complaint process includes:

• Filing an online or written complaint detailing the data privacy violation.
• Providing supporting evidence, such as messages sent to third parties or any public shaming attempts.
• Requesting a formal investigation by the NPC.

The NPC has the power to impose fines, require corrective actions, and recommend criminal prosecution for serious data privacy violations.

3. Filing a Criminal Complaint with Law Enforcement

In cases where the harassment involves threats, coercion, or other criminal behavior, borrowers can file a complaint with the police or the National Bureau of Investigation (NBI). The Revised Penal Code provides penalties for grave threats, unjust vexation, and other forms of harassment, which may result in imprisonment or fines.

4. Filing a Civil Case for Damages

Borrowers can also pursue a civil case for damages if the harassment has caused emotional distress, reputational harm, or financial loss. Article 19 of the Civil Code establishes the principle that individuals must act with fairness and justice in dealing with others. A civil suit can be filed to seek compensation for the harm caused by the lender's abusive actions.

IV. Remedies and Penalties for Abusive Lending Practices

If a complaint against an online lending platform is successful, several remedies are available under the law, including:

• Cease and Desist Orders: The SEC can issue orders to stop the abusive collection practices immediately.
• Fines and Penalties: Violations of SEC regulations or the Data Privacy Act can result in significant financial penalties for the offending company.
• Revocation of License: In severe cases, the SEC can revoke the lending company’s license to operate.
• Criminal Penalties: If criminal actions such as grave threats or coercion are proven, the company or its agents may face imprisonment.
• Damages: Borrowers may be awarded damages in civil cases, providing compensation for the emotional and psychological harm caused by the harassment.

V. Conclusion

Harassment by online lending platforms is a growing issue in the Philippines, but borrowers are not without recourse. Philippine law provides multiple avenues for addressing these abusive practices, from filing complaints with the SEC and NPC to pursuing civil or criminal cases. Borrowers must document all instances of harassment carefully and seek legal advice to ensure that their rights are protected.

By taking appropriate legal action, borrowers can stop the harassment, seek justice, and hold abusive lending companies accountable for their actions.